Latin American currencies jumped on Friday after Federal Reserve Chairman Jerome Powell expressed no surprises in a closely watched speech, suggesting a slow-and-steady pace for US interest rate hikes is still in order. The US dollar weakened as Powell, speaking at a conference of central bankers in Jackson Hole, Wyoming, said a gradual approach of raising rates remains appropriate to protect the US economy and keep job growth as strong as possible with inflation under control.
While most Latin American currencies firmed on the news, the big regional exception was the Argentine peso, which fell to an all-time low even as the central bank once again sold dollars for future delivery in a bid to stem the peso's selloff. The currency fell 1.42 percent on Friday to close at 30.92 pesos per greenback.
Argentina's peso has lost nearly 40 percent of its value this year. It has ranked among the world's worst-performing currencies in 2018, weighed down by a weak economy, high inflation and uncertainty driven by corruption investigations. The country's benchmark MerVal stock index fell nearly 4 percent on Friday.
A slow path of US rate hikes would boost the allure of higher-yielding, emerging market assets. Accordingly, currencies from Mexico, Chile and Colombia firmed between 0.2 percent and 1.3 percent. The Chilean and Colombian pesos led the regional currencies rally, tracking higher prices of key commodity exports copper and crude oil.
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